Late last month, the National Wages Council’s (NWC) recent wage increment recommendation for 2013/2014 has been accepted by the Ministry of Manpower (MOM). The move is meant to help low wage workers cope with the rising cost of living in Singapore. The Government, on its part, strongly supports this guideline, and encouraged companies, unions and workers to come together to achieve higher productivity as well as its related gains.

The NWC has recommended that low wage workers earning up to S$1,000 per month should be given a built-in wage increase at a minimum of S$60 monthly. The recommendations cover the period from 1 July 2013 to 30 June 2014.

In 2012, NWC has recommended a similar built-in wage increase, but at S$50 per month. The recommendation was approved in a bid to lift the wages of local workers, whose salaries have been depressed due to price competition from workers under the Singapore work visa. However, only 8 in 10 unionised companies and 3 in 10 non-unionised companies applied the recommendation.

This year, the NWC has recommended that employers share their productivity gains fairly with workers and in a sustainable manner. It also deems the recommendation as fair, achievable and far from wild.

According to Table 21 of the Ministry of Manpower’s (MOM) Labour Force in Singapore 2012, a total of 51,300 Singapore residents earn less than S$500 while 186,700 others earn between S$500 and S$1,000 in 2012. This means that almost 12% of Singapore residents were earning under S$1,000 last year. Furthermore, more women (approximately 149,700) than men (approximately 88,200) made up this income group.

   Unfortunately, there is no silver bullet to remedy this situation and some of the possibilities at the moment i.e. upgrading of skills and moving up the value chain, involves more opportunity costs and short to medium term pains.”

However, some employers are coming out to say that rising business costs and tough tender pricing competition are making it hard for them to raise wages as recommended.

Firms in the landscaping business for example, anticipate a 5% increase in business costs this year, while security and laundry services anticipate a hike of about 10 – 25%. Furthermore, as it is, some firms are absorbing their own costs increases in order to ensure that expiring contracts will be renewed. In addition, such industries face cost challenges borne by a tight labor market as well as higher foreign worker levies and dependency ratio ceilings.

Analysis by Singapore company registration specialist Rikvin shows that the wage disparity between the richest and the poorest in one of the wealthiest city-states in the world is not the only persistent socio-economic challenge on hand.

“Saddled with increasing business costs, Singapore’s small businesses, unlike its larger and wealthier corporations, find a S$720 increase in business cost per staff per annum a heavy burden. This extra cost unfortunately amounts to a considerable sum, for a company with for example, 20 employees. This means that struggling smaller businesses may not be plain selfish when they say, they do not have the means to commit to this seemingly small wage increment and yet manage a business sustainably,” explained Ms. Christine Lim, General Manager of Rikvin.

“Yet this does not sit well with us, to live in a country as prosperous and costly as Singapore, and to know that 12% of our fellow countrymen are surviving on S$1,000 or less. It brings to attention too, that many of the people who are earning the least in Singapore have not been able to participate meaningfully and be mobile enough to be remunerated with dignity.”

“This then raises questions about the nature of meritocracy in Singapore. This could easily happen to PMETs years down the road, when the world economy evolves. Unfortunately, there is no silver bullet to remedy this situation and some of the possibilities at the moment i.e. upgrading of skills and moving up the value chain, involves more opportunity costs and short to medium term pains,” surmised Ms. Lim.

During a recent dialogue session at the Singapore Indian Development Association, DPM Tharman Shanmugaratnam addressed a couple of hiring issues in the banking sector.

He mentioned that the challenge is not merely quantitative anymore as many Singaporeans are hired in the banking sector, albeit with a high tendency to be plugged into middle and back office positions. The issue now is to ensure that more Singaporeans take on a variety of leading positions as well, such as those in the front office for treasury and trading.

He noted that some banks have better representation of Singaporeans in a variety of roles. However, some others have more Singaporeans in junior roles. To that end, DPM Tharman said that the Ministry of Manpower (MOM) and Monetary Authority of Singapore (MAS), Singapore’s central bank, where he holds the position as Chairman and Finance Minister, have started very active discussions with banks on how to develop opportunities for the Singapore core workforce.

In March, we explored the issue of mitigating hiring discrimination in Singapore’s financial sector. MOM has already said that it will revoke Singapore work visa privileges of a firm that commits discriminatory or unfair hiring actions.

In the video below, Mr. Koh Kar Siong, MD of POSB Consumer Banking Group shares some tips about the banking industry and what is required to work there.

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Half of the year is almost gone and things are looking up economically in the US and Japan. On the home front, Singapore continues to enhance its trade links and carve new opportunities for its enterprises. From India to Russia, Singapore’s trade partners have articulated their interests in closer collaboration as well. However, this doesn’t mean that we’re out of the woods. Private sector economists expect that Singapore’s economy will grow by 2.3% this year due to a weakened manufacturing sector. Given these factors, what can you do? Find out more in this issue.

In this issue:

• Foreword
• EIU Reveals Strategies of Smart SMEs
• Vietnam Opens to More Singapore Firms
• Singapore and Japanese SMEs Set to Cooperate Further
• Singapore Tax Rates Still Attractive to Foreign Workers, Companies
• Have You Heard of the APEC Business Travel Card?
• Update on Work Pass Administrative Fees
• BE Sustainable Outlines Aims in Asia

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According to the latest “Labour Market, First Quarter 2013″ report by the Ministry of Manpower (MOM), job vacancies have risen and unemployment has remained low in Singapore in Q1 2013.

TOTAL EMPLOYMENT

The report revealed that total employment registered 3,386,500 in March 2013, representing a 4% y-o-y increase. It also grew by 28,900 in Q1 2013. However, this is substantially lower than the seasonal high increase of 44,000 in Q4 2012.

UNEMPLOYMENT

Overall unemployment rate stayed low at 1.9% in March, albeit 0.1% up from December 2012. However, the unemployment rate for Singapore residents rose to 2.9%.

Long-term unemployment also improved slightly over the year; 13,700 unemployed residents making up 0.6 per cent of the resident labour force in March 2013 had been looking for work for at least 25 weeks, down from 14,000, or 0.7%, a year ago.

JOB VACANCIES

Job openings also rose by 17% in March 2013 after declining 7.0% in December 2012. In addition, he seasonally adjusted ratio of job vacancies to unemployed persons rose from 1.05 in December 2012 to 1.21 in March 2013.

REDUNDANCIES

2,120 workers made redundant in Q1 2013, representing a dip from the 3,350 workers affected in Q4 2012.

Analysis by Singapore company registration specialist Rikvin shows that a rise in job vacancies reflects business confidence and that companies are bracing for growth. Sectors that are in demand for experienced and skilled staff include the financial services and insurance, information technology, research and development, and the retail and hospitality sectors, according to HR consultancy Randstad.

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Singaporeans often aspire to work in larger multinationals as they are perceived to offer opportunities for international exposure, better remuneration as well as better benefits. However, in the war for talent and amid ongoing restructuring efforts in the labour market, small and medium enterprises (SMEs) in Singapore are tuning in to hiring locally.

In a bid to attract young Singaporeans to work in SMEs, SPRING Singapore, in association with 6 trade associations and chambers as well as 6 tertiary institutions have just launched the SME Talent Programme.

The education institutions involved include the Institute of Technical Education, Nanyang Polytechnic, Ngee Ann Polytechnic, Republic Polytechnic, Singapore Polytechnic and Temasek Polytechnic. The participating trade associations and chambers are Association of Small and Medium Enterprises (ASME), Print and Media Association Singapore, Restaurant Association of Singapore (RAS), Singapore Chinese Chamber of Commerce and Industry (SCCCI), Singapore Manufacturing Federation (SMF) and the Textile and Fashion Federation of Singapore.

Under the programme, students from participating institutions will be matched with SMEs through the participating trade associations and chambers. Eligible students are offered a study award, consisting of tuition fee sponsorship, a study allowance and a sign-on bonus. Upon graduation, the student work at an SME under a two-year bond.

The programme aims to match 3,000 graduates to approximately 800 participating SMEs over the next five years. Up to 70% of the cost of the study awards will be disbursed by SPRING. The programme is set to cost S$70 million during this period.

Analysis by Singapore company registration Rikvin shows that this programme is a promising way to cope with the enhancements to the Singapore work visa framework. As authorities have already given a heads up that more changes are in the pipeline to raise the salary and educational requirements of the S Pass, access to foreign mid skilled workers is set to be more challenging to said industries.

“Sourcing internally and creating opportunities for the existing pool of residents in Singapore is a prudent approach to this issue. We anticipate that this programme will benefit students as well as SMEs that have been struggling to meet their manpower needs,” opined Ms. Christine Lim, General Manager of Rikvin.

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According to a report by BBC titled Singapore’s low tax rate an incentive for foreigners, enjoying an attractive tax rate is a factor that weighs into the final decision to relocate to Singapore for work or business.

For workers coming from jurisdictions which have relatively high personal income tax rates, Singapore is an attractive alternative, even though alcohol and cigarettes are taxed heavily there.

In the video below, BBC journalist Mariko Oi illustrates how a person earning US$100,000 per annum will pay personal income tax at a rate of approximately 24% in the UK and California or 30.1% in Sweden. In comparison, Singapore’s personal tax rate for the same person will be a little over 7%.

Commenting on this, Ms Christine Lim, General Manager of Rikvin said, “Singapore has one of the most attractive personal tax rates in the world. When various reliefs such as the spouse, child and earned income reliefs are considered, the tax burden is lowered significantly. This is attractive for professionals with families who reside in Singapore over the longer term.”

Analysis by Rikvin shows that lower personal income tax burden mean that workers take home a higher disposable income, which then translates to higher spending power. The report also sheds light that brands opt for Singapore company incorporation and set up global headquarters here because of immense market opportunities as well as the attractive Singapore corporate tax rates. In addition, to promote entrepreneurship, Singapore offers its newly-launched startups a tax rebate under the SUTE, the Startup Tax Exemption Scheme.

Nonetheless, its comparatively low tax rates have earned Singapore the moniker “Switzerland of the East,” a tag which implicates the unpleasant aspects of being a tax haven. Though tax havens are in essence not illegal, wilful tax evasion is. Singapore takes such cases seriously and has effected tighter banking rules this month as well as greater international cooperation. These efforts aim to counter instances of wilful tax evasion and maintain its clean image.

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Although Russia-Singapore total trade amounted to $6.1 billion last year, representing almost a S$2 billion y-o-y increase, Russian companies and investors want to see more cooperation with enterprises that have opted for Singapore company incorporation.

According to First Deputy Prime Minister of the Russian Federation, Igor Shuvalov, this issue will be tabled in the upcoming fourth session of the High-Level Russia-Singapore Inter-Governmental Commission in St Petersburg on 19 June 2013.

The event coincides with the St Petersburg International Economic Forum (SPIEF) that will be held on 20 – 22 June. The Forum also serves as a venue for the Russia-ASEAN business forum, which provides a platform for world leaders, participants and experts to discuss Russia’s role in the future of the global economy.

To date, there has been a great disparity between the volume of bilateral trade between ASEAN and Russia, compared to for example, China and the United States. In 2010, bilateral trade between ASEAN and Russia registered only US$7 billion, while trade with China registered US$180 billion and that with the US was worth $150 billion.

It is no wonder then that the Russian government is very keen on developing trade with what it deems as a key gateway to Asia for the Russian business. In addition, Russian investors see Singapore as a natural base for Russian investors to enter Southeast Asia and make inroads in key sectors such as finance, IT, energy, biotechnology and retail.

In the video below, Singapore resident and investor Jim Rogers talks about what he sees in Russia and why he is making investments there. The panel also discusses the challenges of doing business in Russia.

Nevertheless, Russia has plenty to offer to the world and to Singapore companies. According to IE Singapore, Russia is considered an energy superpower and has the world’s largest reserves of mineral and energy resources. It has the world’s largest forest reserves and its lakes contain approximately one-quarter of the world’s unfrozen fresh water. Russia has a population size of over 140 million, making it the largest market in Europe.

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According to a new study by The Economist Intelligence Unit (EIU) entitled Smart SMBs: Fine-tuning the engines of growth, small businesses worldwide, including those from Singapore, are focused on revenue growth and improving operational efficiency over the next 12 months. Attracting and retaining talent, developing new products and services as well as entering new markets and distribution channels also rank highly in their priorities.

CLOSE LINK BETWEEN EFFICIENCY AND GROWTH

According to EIU, new businesses have a high chance of failure in the nascent five years of starting up. Hence, a strategic focus on revenue growth is logical.

The survey also reveals that SMEs recognize the correlation between efficiency and growth and those who recognize this earlier on tend to be in good stead in the later stages of their growth.

Primarily, the respondents recognize that expanding the business (55%) is the main driver for efficiency improvements over the next year. This is followed by increasing profitability and increasing employee productivity. Interestingly, these factors weigh more significantly than reducing costs (24%) or improving competitiveness (15%).

In addition the study found that 91% of SMEs have made technology-driven improvements to their business during the last 12 months. Instead of investing in new and untried technology, more SMBs are planning to upgrade existing infrastructure and systems over the next 12 months rather than invest in completely new technology. The reason cited is caution, as there was a lack of IT skills or know-how within the business.

Analysis by Singapore company registration specialist Rikvin shows that these findings shed light on Singapore’s current restructuring drive, and particularly, the impetus on improving efficiency through the Productivity and Innovation Credit Scheme.

Also known as the PIC Scheme, the program was introduced in 2010 to encourage companies to move up the value chain through tech and innovation investments. In spite of gradual enhancements, the pick up rate has been been modest (approximately 30%). As discussed in our November 2012 issue of Rikvin Connect, there are a number of reasons for not tapping the PIC Scheme, especially for enterprises that have survived long and well without applying new technology. However, for many tech startups that are developing in Asia, Singapore is the place to be because of its curiosity and interest in new technologies as well as the companies that develop them.

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The BE Sustainable family of companies has officially launched its operations with a landmark meeting with Singapore’s Economic Development Board (EDB) and National Environment Agency (NEA) on 29 May 2013. BE Sustainable Pte. Ltd. was incorporated in Singapore last year.

Setting out its aims in Asia, Dr. Phil Risby, one of the two founding partners of BE Sustainable Pte. Ltd. said, “We are excited by Singapore’s courage and receptiveness to responsibly address its long-term concerns of water, energy and food security. These are serious issues faced by everyone. BE Sustainable has been warmly welcomed to Singapore and in return, we are pleased to offer a full range of services, innovative technologies and effective solutions to assist with the realisation of Singapore’s long-term sustainability targets, and with the opportunity to take it out to the global market.”

Dr. Risby, a scientist and an experienced serial entrepreneur, has founded and grown numerous successful companies in England, USA and the Caribbean. He is also the originator of two of the one hundred innovations that can change the world, as identified by Professor Gunter Pauli in his Blue Economy initiative, ‘100 innovations, 10 years, 100 million jobs’. Gunter Pauli has defined The Blue Economy as a practical and effective response to the Club of Rome’s Limits to Growth.

 We are excited by Singapore’s courage and receptiveness to responsibly address its long-term concerns of water, energy and food security. These are serious issues faced by everyone.”

BE Sustainable not only preaches, but practices a ‘systems approach’ in its structure, operations and management. It orchestrates innovation and technology, art and communication, engineering and economics, education and social awareness, into one ‘collective intelligence.’

This collective intelligence is contributed by world-renowned specialists in the key areas of food, energy and water security, waste, education, healthcare and communications. This then enables BE Sustainable to deliver profitable long-term effective solutions, including its extensive collection of innovative technologies and tools such as the Integrative Design process to industries, governments and society.

Commenting further on how BE Sustainable achieves its unique offering, Dr. Risby added, “We have become a magnet for both entrepreneurs and investors, we speak their languages and understand their challenges. Our primary objective is a successful outcome; the challenge is how to realise this outcome, a path that often requires as much creativity in finding new business models and paradigm shifting as found in the technology being used.”

On the decision to be based in Singapore, Dr. Risby said, “Singapore is not just ideally placed between East and West, but it is one of the very few forward-thinking countries placing a strong focus to address the inevitable issues of the future. It is now that ideas and innovations need to be drawn together and implemented, not in 50 years time when it is too late. Singapore understands this and is actively encouraging innovation and investment to ensure that its people continue to have a world class quality of life. I can think of no better place for BE Sustainable to be located.”

To that end, BE Sustainable has engaged the services of Rikvin, a Singapore company registration specialist. Describing its incorporation experience, Dr. Risby said, “Rikvin’s consultants have demonstrated a responsiveness and efficiency second to none. Their entire team has been professional, friendly and supportive at every step of the way. Their performance has been faultless on every count and I will not hesitate to recommend them to any company wishing to relocate to Singapore.”

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ABOUT BE SUSTAINABLE
The BE Sustainable family of companies consists of several business units – BE Advisory, BE Research, BE Integrative Design, BE Intermediary Services, BE Governance, BE Regional Resilience, BE Sustainable SA and BE Sustainable EU. Inspired by Gunter Pauli’s The Blue Economy initiative ‘100 innovations, 10 years, 100 million jobs,’ the company applies a ‘systems approach’ to long-term sustainability issues such as water, energy and food security without compromising profitability. BE Sustainable’s founders and consultants have delivered effective solutions to industries, government and societies worldwide.
http://www.besustainable.sg/

In a bid to ensure that Singapore investors can seek opportunities in Vietnam, Prime Minister Nguyen Tan Dung has outlined several economic reforms that are in the pipeline. These reforms include developing its infrastructure and nurturing skilled workers, particularly in high technology sectors.

PM Nguyen added that Singapore companies are important to Vietnam’s economic development. According to data from International Enterprise (IE) Singapore, bilateral trade between the two economies registered approximately S$15.8 billion in 2012, up from S$14.9 billion in 2011.

To Singapore, Vietnam is a country with immense long-term potential. Its consumer sector is growing, catalyzed by an expanding population, rising disposable incomes and better educational qualifications. In addition, the country’s rapid urbanisation, abundance of natural resources and large domestic economy open up many opportunities for Singapore incorporated companies engaged in education, healthcare and F&B.

In addition, both countries celebrate 40 years as allies this year. Singapore is now Vietnam’s third largest foreign investor, with investments worth S$33.5 billion in real estate, electronics, healthcare and shipping for example. Vietnam, on the other hand, is Singapore’s 18th largest trading partner.

Commenting further, Ms. Christine Lim, General Manager of Rikvin said, “We anticipate that Singapore and Vietnamese companies will continue to collaborate and tap on each other for opportunities and expertise. This will continue to open up doors for enterprises that opt for Singapore company registration, with the hope of expanding in Vietnam and other emerging countries. In this light, we anticipate that more firms will continue to find Singapore an attractive hub from which to tap opportunities in the region.”

In the video below, Mr. Ho Kwon Ping, CEO of Banyan Tree Group talks about why his company proceeded to make long term investments in Vietnam even during the 2008 global economic crisis.

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Asia’s biomedical sciences have made rapid advances in recent years. At the heart of this remarkable development is Singapore, the region’s leading bio-cluster.

To date, the world’s top pharmaceutical and medical technology companies have setup regional headquarters in Singapore, attracted by the city-state’s world class infrastructure, outstanding intellectual property protection, strategic research collaborations, as well as extensive regional and global connectivity.

Some of the global brands which have established a presence in Singapore include: Bauer Schering Pharma, Abbott, GE Healthcare, Johnson & Johnson, Merck Sharp & Dohme, and Roche, among other key industry players.

Integrated Research Ecosystem

Singapore’s biomedical sciences sector offers an integrated research and academic ecosystem that enables international firms to tap a diverse range of capabilities. This multidisciplinary and interdisciplinary approach sets Singapore apart from other biomedical research hubs.

In addition, the sector leverages collaborations with relevant research institutes and consortia, particularly in the areas of: clinical sciences, genomics, bioengineering, molecular/cell biology, medical biology, bio-imaging and immunology.

According to the Singapore Economic Development Board, there are currently over 50 Singapore-incorporated companies that are focusing on biomedical sciences R&D, including drug discovery, translational and clinical research. These private sector firms, in turn, frequently collaborate with research institutes on various initiatives.

Such strategic collaborations, along with the synergy of shared capabilities, have resulted in robust quality growth, making Singapore the leading biomedical research and development hub in the region, and one of the world’s most rapidly growing bio-clusters.

Clinical Research Excellence

Singapore’s clinical research excellence is renowned in the global scientific community. The city-state’s cutting-edge biomedical research institutes include:

• Bioinformatics Institute
• Bioprocessing Technology Institute
• Genome Institute of Singapore
• Institute of Bioengineering & Nanotechnology
• Institute of Medical Biology
• Institute of Molecular and Cell Biology
• Singapore Institute for Clinical Sciences

Manufacturing Hub

Bolstered by its vibrant R&D community, Singapore has likewise emerged as an ideal location for biomedical manufacturing.

Some of the globe’s leading biopharmaceutical brands and medical technology companies have invested in commercial-scale manufacturing facilities in the city-state, including Abbott, GlaxoSmithKline, Lonza, MSD, Novartis, Pfizer and Sanofi-Aventis, among others.

Regulatory Framework and Government Initiatives

Singapore fosters a pro-innovation environment that facilitates the development of innovative therapies, while simultaneously ensuring global standards of safety, quality and efficacy.

The Singapore Health Sciences Authority (HSA) plays an active role in defining new regulatory frameworks to further improve research programmes in relevant fields. The HAS Academy developed synergies across a unique conglomeration of diverse scientific and biomedical capabilities. In addition, the agency has been a catalyst for thought leadership in Singapore, facilitating global discussions on cutting-edge issues in various areas of biomedical sciences.

More importantly, the government has pioneered strategic initiatives to promote clinical excellence and research advancements. Some of the noteworthy programmes include the Singapore Translational Research (STaR) Investigator Award, the Clinician Scientist Award (CSA), and Translational & Clinical Research (TCR) Flagship Programme, among others.

Looking Ahead

The Singapore biomedical sciences sector has immense potential for rapid growth. With a strong research backbone, excellent infrastructure and a pro-innovation ethos, the city-state will continue to be a dominant player in the global biomedical technology industry.

The Singapore biomedical sciences sector has immense potential for rapid growth. With a strong research backbone, excellent infrastructure and a pro-innovation ethos, the city-state will continue to be a dominant player in the global biomedical technology industry.

As such, Singapore-incorporated companies and research organizations are poised for further expansion. In succeeding years, the need for qualified talent will escalate.

Some of the jobs that are currently in demand include:

• Automation Engineer
• Analytical Chemist
• Facilities/Utilities Engineer
• QA Supervisor
• QC Microbiologist
• Maintenance Engineer
• Manufacturing Biotechnologist
• Medical Representatives
• Medical and Regulatory Affairs Director
• Scientist, Analytical Biochemistry
• Scientist, Molecular and Cellular Biology

Congruently, investors are anticipated to form a Singapore company to fill gaps in relevant growth areas.

Meanwhile, Singapore has committed S$16.1 billion in continued support of research, innovation and enterprise between 2011 and 2015. Out of these resources, a total of S$3.7 billion will be invested to enhance existing R&D infrastructure, integrating multidisciplinary research and translating findings into practical solutions.

Shortly after announcing its wish for a more robust review of the JSEPA due to a growing presence of Japanese companies in Singapore, the Singapore government, through SPRING Singapore has signed an MOU with two major Japanese banks i.e. Japan Bank for International Cooperation (JBIC) and Mizuho Corporate Bank (MCB). MCB said that approximately 200 of its new Japanese clients had plans to expand and opt for Singapore company formation.

According to the official statement by SPRING Singapore, the MOU seeks to promote business collaboration between Japanese and Singaporean SMEs in ASEAN. Collaboration includes the co-development of innovative technologies and products, setting up joint ventures to launch new businesses into other ASEAN markets, or tapping into one another’s knowledge and networks to facilitate expansion.

The MOU also seeks to provide a platform for exchanging information on financial tools such as fund investments and loans.

On its part, Singapore has agreed to promote Japan’s SMEs in the region by working together with Singaporean SMEs. Industries that show high potential for collaboration include medical technology, engineering, food and fashion.

  In 2011, there were 722 Japanese companies in Singapore. In 2012, Japan emerged as Singapore’s eighth largest trade partner, with total trade amounting to S$52.1 billion.

In 2011, there were 722 Japanese companies in Singapore. In 2012, Japan emerged as Singapore’s eighth largest trade partner, with total trade amounting to S$52.1 billion.

Both countries are keen on tapping on each of their respective advantages – for example, Japan’s technological innovation capabilities with Singapore’s infrastructure, workforce and intellectual property regulations.

Analysis by Rikvin shows that Japan has improved in its GDP growth and foreign exchange rates following Prime Minister Shinzo Abe’s expansionary economic policies. The IMD 2013 World Competitiveness Yearbook has seen Japan climb 3 notches to position 24, due to great strides in efficiency and productivity.

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